Claims Court Lifts Barrier for US Navy Construction

WASHINGTON (CN) – The Court of Federal Claims lifted an injunction against the U.S. Navy that halted a construction contract due to alleged bid rigging by Japanese contract winner IBC/TOA Corp.

Losing bidder Watts-Healy Tibbitts sued the government and the marine construction company in protest of the November 2007 decision to let IBC build an extension to the Kilo Wharf in Guam because the company had been cited three times for bid rigging, a practice that inflates construction costs at taxpayer expense. In 2007 IBC paid the Japan Fair Trade Commission nearly $114 million yen, or $1.5 million dollars, on two counts of bid rigging, and was suspended in 2008 for antitrust violations. IBC didn’t mention the violations in its bid proposal to the U.S. government, the ruling states. Watts-Healy said the Navy’s contracts officer gave only “cursory consideration” to bid-rigging charges, waving them off as commonplace in Japan. Even if the contracts officer was too lenient on IBC in awarding the contract, Judge Loren Smith wrote, the court would not interfere with the Navy’s judgment on the contract. A previous court ruling had forced reconsideration of the contract by a new contracting officer, and the Navy had complied by bringing in Robert Griffin Jr. to reinvestigate IBC. Griffin found senior IBC officials “personally committed” to eradicating the practice of bid rigging and approved the contract. Smith said the government’s actions “meet the standard for a decision that is not arbitrary and capricious.” The judge added: “Even though the court might not agree that it is in the best interest of the United States to contract with a company that has been sanctioned not only once, but on at least three separate occasions for bid rigging, the court may not ‘substitute its judgment for that of the agency.'”